Chairman’s statement
Stepping up On behalf of the Board, I would like to welcome colleagues who have joined in the year and to thank everyone throughout DS Smith for their commitment. for DS Smith shareholders. The acquisition will be financed through a combination of a rights issue and new debt. All shareholders will receive details setting out how they can participate in the rights issue, in separate documentation.
Dividend
For the year 2017/18, the Board recommends a final dividend of 9.8 pence, which reflects the growth in the business and is in line with our policy of dividend cover of 2.0 to 2.5 times earnings. The dividend will be payable to all shareholders on the record date, including in respect of shares to be issued in the rights issue.
Delivering sustainable value Gareth Davis – Chairman
Performance
2017/18 has been a year of strong growth for DS Smith, both organically and through acquisition. The organic box volume growth of over 5 per cent is a material step up from prior years and demonstrates how we are succeeding with a compelling offering for multinational customers. We are gaining market share along with taking advantage of the more positive economic environment in Europe. That growth in market share is in part due to the increased importance of display packaging and e-commerce packaging – areas in which we have consistently invested in and have a leadership position. This year saw our first move into the corrugated packaging market in the US, by an acquisition in August 2017, and I am delighted by the progress that has been made. It was a bold move, but one that we knew to be backed up by demand from customers in Europe, who also operate in the US and want the opportunity to buy our type of packaging there too. The reaction from local customers in the US has been excellent also, with growth higher in the US than we have seen in Europe. Our new employees in the US and our established integration team have all done a wonderful job in making a success of the acquisition and the progress to date is an excellent platform for the coming year. When we invest, financial discipline is paramount and I am pleased to report that we have once again achieved all our financial targets, with our return on average capital employed at around the top of our range, at 14.1 per cent.
Since May 2010, under current leadership, the business has consistently delivered growth and returns. Total shareholder return, which is a measure of growth in the share price combined with the benefit of reinvested dividends, has grown 628 per cent, considerably out-stripping the FTSE 100 at 82 per cent and the FTSE 250 at 143 per cent over the same period. In December 2017 DS Smith Plc moved up into the FTSE 100. While this is a reflection of our growth rather than an aim in itself, I am very proud of the business, which has grown in market capitalisation more than six times over in the period since I became Chairman. The credit belongs to each and every person who works for DS Smith, from the leadership team to the factory floor, all of whom have played their part. Total shareholder return
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Outlook
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On behalf of the Board, I would like to welcome colleagues who have joined in the year and to thank everyone throughout DS Smith for their commitment. That hard work has delivered these excellent results, with more customers than ever looking to DS Smith for their sustainable packaging solutions. The Board has great confidence in the future.
Acquisition of Europac
On 4 June 2018, we announced the proposed acquisition of Papeles y Cartones de Europa, S.A., known as Europac, a leading western European integrated packaging business. The acquisition has a highly compelling strategic rationale and we expect that it will create significant value for customers and consistent and attractive returns
DS Smith FTSE 100 FTSE 250
Gareth Davis Chairman
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